CORVALLIS - The cost of raising a child continues to rise and is highest for families living in cities in the western United States, according to the U.S. Department of Agriculture.
In its annual report "Expenditures on Children by Families," the USDA estimates a middle income (making $35,200 to $59,300 a year before taxes), two-parent family in the urban West will spend $165,630 to raise a child born in 1997 to age 18.
Child-raising costs in the urban West are higher than the rest of the country primarily because housing is more expensive, according to Alice Mills Morrow, Oregon State University Extension family resource specialist.
Housing is the largest expense across all income groups and accounts for 33 to 37 percent of child-rearing expenses. Food is the second largest average expense, accounting for 15 to 20 percent.
The cost of food for a child rises steadily as the child grows older, almost doubling by the teenage years, according to the report. A middle income family in the urban West spends an estimated $1,060 per year on food for a child from birth to age two. The food budget will reach an estimated $2,050 per year for the same child when she or he is between ages 15-17.
Unlike food expenses, the cost of child care is highest during the first five years of life. Child care is the only expense that decreases as a child grows older.
Because single-parent households account for an increasing percentage of families with children, the USDA prepared separate estimates for these households.
These estimates show that a single parent family with before-tax income of less than $35,500 will spend $107,100 to raise a child born in 1997 to age 18. While the actual expenditure is less, it represents a larger percentage of income.
"Single-parent families have lower average incomes and spend a larger percentage of their income on children," Morrow said.
Because the USDA estimates are based on averages, they are not useful in predicting what a particular family will spend. However, they do illustrate useful trends. For instance, the overall cost of raising a child increases as a child gets older, a signal for parents to continually find ways to add to their income.
"That's probably not good news for parents of pre-school children who think financial pressures will be less when day care is no longer required," Morrow said. "Unfortunately, the savings in child care as youngsters grow older is more than offset by increases in other expense categories."
What can parents do to reduce the "sticker shock" of a new baby?
"New parents really need to sit down and put their finances on paper," Morrow said. "Good budgeting and financial record keeping can help." For computer-savvy parents, financial software programs may make the job easier.
In a child's early years, the biggest financial changes are the additional costs for child care and loss of income if one spouse cuts back on work. If a spouse goes on unpaid leave, are savings available that can be used to help make up for reduced income?
"Families also need to look for ways to cut back on expenses," Morrow said. "The challenge is to identify what they are willing to go without." She suggests having each spouse separately make a list of expenses they would be willing to give up or reduce. Then compare the lists and find items in common.
"If nothing else, these lists can be a starting point for discussion," Morrow pointed out.
She also recommends tracking income and expenses. This may involve digging out old bills, canceled checks, credit card statements and receipts. Then look for expenses you are willing to reduce.
Reducing spending in certain areas is more likely to be successful than cutting something out entirely. "It's probably unrealistic to say you'll never eat in a restaurant again or never go to a movie. But it may be realistic to say you will cut back or make changes - perhaps renting videos rather than going to movies," said Morrow.
The USDA estimates only apply to costs from birth through age 18. They do not include the cost of saving for college. While saving for college is encouraged, Morrow says people need to take care of immediate concerns first and get their current situation under control.
And supporting children may not end after they graduate from college. A 1996 survey by Phoenix Home Life Mutual Insurance Company found that 47 percent of parents in their 50s provide some support for children over 21 years of age.
To receive a copy of the 1997 estimates of raising a child, send a stamped, self-addressed envelope to Morrow at OSU, 161 Milam Hall, Corvallis, OR 97331-5106.
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Alice Mills Morrow, 541-737-1013